Review on Wrapped Bitcoin by Umut ERDOGAN
Wrap - Open
What is the WBTC-BTC Difference?
Many of the most popular defi dapps require the use of Ethereum collateral. Products like MakerDAO and Compound require users to lock down crypto assets in order to borrow other crypto assets. Because Ethereum's overall value is significantly smaller than Bitcoin, this limits how large these protocols can grow. By introducing Bitcoin, protocols increase liquidity and thus create more sources of collateral for their dapps. Wrapped Bitcoin allows Bitcoin holders to continue to hold it as an asset and also use DeFI dapps such as Compound to borrow or lend.
Compared to BTC, Wrapped BTC will never have the same level of security as the original because it relies on people and organizations to manage the system rather than pure code.
To increase trust and transparency, WBTC undergoes regular audits and publishes all on-chain transactions and verifications for Bitcoin and Ethereum networks. Users can independently verify how much BTC has been sent to the WBTC address on the Bitcoin blockchain. It can then check if these transactions match the creation of WBTC tokens on the Ethereum blockchain. WBTC's reverse writing process can also be followed on the chain to get BTC back.
Pros
- Transactions between Ethereum
- Crypto loans are paid using DAI stablecoin.
- Transfer variety
Cons
- High transaction fee
